Apply WACC in IRR. Leeward Sailboats is reviewing the following new boat line: Category T0 T1 T2 T3 Investment −$9,116,807 Net working capital change −$636,000 $636,000 Operating cash flow $2,930,000 $3,413,000 $4,156,000 Salvage $597,000 At what adjusted WACCs will the company accept this project? Hint: Find the IRR of the project, and use it as the maximum adjusted WACC for accepting the project. What is the IRR of the project? (Round to two decimal places.)
Apply WACC in IRR. Leeward Sailboats is reviewing the following new boat line: Category T0 T1 T2 T3 Investment −$9,116,807 Net working capital change −$636,000 $636,000 Operating cash flow $2,930,000 $3,413,000 $4,156,000 Salvage $597,000 At what adjusted WACCs will the company accept this project? Hint: Find the IRR of the project, and use it as the maximum adjusted WACC for accepting the project. What is the IRR of the project? (Round to two decimal places.)
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
Related questions
Question
Apply WACC in
IRR .
Leeward Sailboats is reviewing the following new boat line:
|
Category
|
T0
|
T1
|
T2
|
T3
|
|
|
|
Investment
|
−$9,116,807
|
|
|
|
|
|
|
Net working capital change
|
−$636,000
|
|
|
|
$636,000
|
|
|
Operating cash flow
|
|
|
$2,930,000
|
$3,413,000
|
$4,156,000
|
|
|
Salvage
|
|
|
|
|
$597,000
|
|
At what adjusted WACCs will the company accept this project?
Hint:
Find the IRR of the project, and use it as the maximum adjusted WACC for accepting the project.What is the IRR of the project?
(Round to two decimal places.)
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